All else equal, if inflation decreases by 0 %, what will happen to the nominal interest ra o The real interest rate will decrease by 0 %. o The nominal interest rate will decrease by 0 %. o The nominal interest rate will increase by 0 %. o The real interest rate will increase by 0%.

All else equal, if inflation decreases by 0 %, what will happen to the nominal interest ra o The real interest rate will decrease by 0 %. o The nominal interest rate will decrease by 0 %. o The nominal interest rate will increase by 0 %. o The real interest rate will increase by 0%.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations

Section: Chapter Questions

Problem 13P

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Question

Suppose the real interest rate is 3% and expected inflation is 3%. What is the nominal
interest rate?
nominal interest rate: =
I
All else equal, if inflation decreases by 0%, what will happen to the nominal interest rate?
o The real interest rate will decrease by 0%.
o The nominal interest rate will decrease by 0 %.
o The nominal interest rate will increase by 0%.
o The real interest rate will increase by 0%.
1
What do economists call the relationship between the nominal interest rate and the
inflation rate?
o shoeleather costs
Leontief paradox
86
• Taylor rule
Fisher equation

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